SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
A. Full Title of the plan and the address of the the plan, if different
from that of the issuer named below:
HOUGHTON MIFFLIN COMPANY EMPLOYEES' SAVINGS AND THRIFT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Houghton Mifflin Company
222 Berkeley Street
Boston, Massachusetts 02116-3764
Page 1 of 19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned, thereunto duly authorized.
Houghton Mifflin Company
Retirement Committee
Date: March 30, 1994 By:/S/Gary L. Smith
--------------------
Gary L. Smith
Chairman, Houghton Mifflin
Retirement Committee
2
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Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 2-69298), as amended, pertaining to the Houghton Mifflin Company
Employees' Savings and Thrift Plan of our report dated February 25, 1994, with
respect to the financial statements and schedules of the Houghton Mifflin
Company Employees' Savings and Thrift Plan included in the Annual Report (Form
11-K) for the year ended December 31, 1993.
/S/ ERNST & YOUNG
------------------
ERNST & YOUNG
Boston, Massachusetts
March 30, 1994
3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Committee and Participants
Houghton Mifflin Company
Employees' Savings & Thrift Plan
We have audited the accompanying statements of financial condition of the
Houghton Mifflin Company Employees' Savings and Thrift Plan at December 31, 1993
and 1992, and the related statements of changes in participants' equity for each
of the three years in the period ended December 31, 1993. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Houghton Mifflin Company
Employees' Savings and Thrift Plan at December 31, 1993 and 1992, and its
changes in participants' equity for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) reportable transactions for the year ended December 31, 1993 and (2)
party-in- interest transactions for the year ended December 31, 1993 are
presented for purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 and are not a required part of the basic financial
statements. The supplemental schedules have been subjected to the auditing
procedures applied in our audit of the 1993 financial statements and, in our
opinion, are fairly stated in all material respects in relation to the 1993
basic financial statements taken as a whole.
/S/ERNST & YOUNG
---------------------
ERNST & YOUNG
Boston, Massachusetts
February 25, 1994
4
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HOUGHTON MIFFLIN COMPANY
EMPLOYEES' SAVINGS AND THRIFT PLAN
STATEMENT OF FINANCIAL CONDITION
December 31, 1993
----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
ASSETS
Investments (Notes 1
and 3): $24,205,883 $31,991,787 $9,085,846 $65,283,516
Fund transfers
outstanding 13,602 (76,600) 62,998
Contributions and other
receivables, net 103,348 1,961 105,309
----------- ----------- ---------- -----------
Total assets $24,322,833 $31,917,148 $9,148,844 $65,388,825
=========== =========== ========== ===========
LIABILITIES AND
PARTICIPANTS'
EQUITY
Withdrawals and
distributions
payable $ 419,720 $ 457,873 $ 64,942 $ 942,535
Participants'
equity 23,903,113 31,459,275 9,083,902 64,446,290
------------ ----------- ---------- -----------
Total liabilities
and participants'
equity $24,322,833 $31,917,148 $9,148,844 $65,388,825
============ =========== ========== ===========
See accompanying notes to financial statements.
5
<PAGE>
HOUGHTON MIFFLIN COMPANY
EMPLOYEES' SAVINGS AND THRIFT PLAN
STATEMENT OF FINANCIAL CONDITION
December 31, 1992
----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
ASSETS
Investments (Notes 1
and 3): $22,095,061 $30,580,737 $3,184,049 $55,859,847
Cash 136 377 (251) 262
Fund transfers
outstanding 183,115 (704,776) 521,661
Contributions and other
receivables, net 127,988 244 128,232
---------- ---------- ---------- ----------
Total assets $22,406,300 $29,876,582 $3,705,459 $55,988,341
=========== =========== ========== ===========
LIABILITIES AND
PARTICIPANTS'
EQUITY
Withdrawals and
distributions
payable $ 306,737 $ 124,427 $ 9,580 $ 440,744
Participants'
equity 22,099,563 29,752,155 3,695,879 55,547,597
---------- ---------- --------- ----------
Total liabilities
and participants'
equity $22,406,300 $29,876,582 $3,705,459 $55,988,341
=========== =========== ========== ===========
See accompanying notes to financial statements.
6
<PAGE>
HOUGHTON MIFFLIN COMPANY
EMPLOYEES' SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
Year Ended December 31, 1993
-----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
Investment income:
Interest income $ 1,370,102 $ 3,409 $ $ 1,373,511
Dividend income 299,675 593,400 475,438 1,368,513
----------- ----------- ---------- -----------
Net investment
income 1,669,777 596,809 475,438 2,742,024
Realized gains 25,938 3,370,711 23,950 3,420,599
Increase in
unrealized
appreciation
(Note 3) 9,491 2,897,944 208,129 3,115,564
----------- ----------- ---------- -----------
1,705,206 6,865,464 707,517 9,278,187
Contributions:
Participating
employees 1,551,937 1,746,606 1,527,436 4,825,979
Houghton Mifflin
Company-matching 1,896,061 1,896,061
----------- ----------- ---------- -----------
Total contributions 1,551,937 3,642,667 1,527,436 6,722,040
----------- ----------- ---------- -----------
3,257,143 10,508,131 2,234,953 16,000,227
Fund transfers 1,272,569 (5,086,744) 3,814,175
Withdrawls and
distributions
(Note 2) (2,726,162) (3,714,267) (661,105) (7,101,534)
----------- ---------- ---------- -----------
Net increase in
participants'
equity 1,803,550 1,707,120 5,388,023 8,898,693
Participants' equity
at beginning of
year 22,099,563 29,752,155 3,695,879 55,547,597
----------- ----------- ---------- -----------
Participants' equity
at end of year $23,903,113 $31,459,275 $9,083,902 $64,446,290
=========== =========== ========== ===========
See accompanying notes to financial statements.
7
<PAGE>
HOUGHTON MIFFLIN COMPANY
EMPLOYEES' SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
Year Ended December 31, 1992
-----------------------------------------------------
Fixed Houghton
Income Stock Equity Total
Fund Fund Fund Plan
----------------------------------------------------
Investment income:
Interest income $ 1,459,073 $ 5,417 $ 14 $ 1,464,504
Dividend income 229,073 605,329 93,646 928,048
----------- ----------- ----------- -----------
Net investment
income 1,688,146 610,746 93,660 2,392,552
Realized gains 11,514 417,009 428,523
Increase in
unrealized
appreciation
(Note 3) 19,709 7,812,294 12,998 7,845,001
----------- ----------- ---------- -----------
1,719,369 8,840,049 106,658 10,666,076
Contributions:
Participating
employees 2,122,092 1,939,423 519,405 4,580,920
Houghton Mifflin
Company-matching 1,794,347 1,794,347
----------- ----------- ---------- -----------
Total contributions 2,122,092 3,733,770 519,405 6,375,267
----------- ----------- ---------- -----------
3,841,461 12,573,819 626,063 17,041,343
Fund transfers (369,253) (2,712,511) 3,081,764
Withdrawls and
distributions
(Note 2) (2,019,982) (1,501,162) (11,948) (3,533,092)
----------- ----------- ---------- -----------
Net increase in
participants'
equity 1,452,226 8,360,146 3,695,879 13,508,251
Participants' equity
at beginning of
year 20,647,337 21,392,009 0 42,039,346
----------- ----------- ---------- -----------
Participants' equity
at end of year $22,099,563 $29,752,155 $3,695,879 $55,547,597
=========== =========== ========== ===========
See accompanying notes to financial statements.
8
<PAGE>
HOUGHTON MIFFLIN COMPANY
EMPLOYEES' SAVINGS AND THRIFT PLAN
STATEMENT OF CHANGES IN PARTICIPANTS' EQUITY
Year Ended December 31, 1991
------------------------------------------
Fixed Houghton
Income Stock Total
Fund Fund Plan
-----------------------------------------
Investment income:
Interest income $ 1,601,199 $ 7,910 $ 1,609,109
Dividend income 544,771 544,771
----------- ----------- -----------
Net investment
income 1,601,199 552,681 2,153,880
Increase in
unrealized
appreciation
(Note 3) 2,497,642 2,497,642
----------- ----------- -----------
1,601,199 3,050,323 4,651,522
Contributions:
Participating
employees 2,105,030 1,735,905 3,840,935
Houghton Mifflin
Company-matching 1,380,607 1,380,607
----------- --------- -----------
Total contributions 2,105,030 3,116,512 5,221,542
----------- --------- -----------
3,706,229 6,166,835 9,873,064
Fund transfers 649,180 (649,180)
Withdrawls and
distributions
(Note 2) (1,398,344) (1,036,618) (2,434,962)
----------- ----------- -----------
Net increase in
participants'
equity 2,957,065 4,481,037 7,438,102
Participants' equity
at beginning of
year 17,690,272 16,910,972 34,601,244
----------- ----------- -----------
Participants' equity
at end of year $20,647,337 $21,392,009 $42,039,346
=========== =========== ===========
See accompanying notes to financial statements.
9
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
1. Plan Description
The Houghton Mifflin Company Employees' Saving and Thrift Plan, a defined
contribution plan adopted as of January 1, 1981, and operated under a Trust
Agreement, is a long-term savings and investment program to which the Company
and its employees contribute. All full-time domestic employees, including union
employees as of April 1, 1992, with at least one year of service are eligible to
participate in the Plan.
The Plan has three separate and distinct funds:
Fixed Income Fund (formerly known as the Guaranteed Income Fund)- a fund
that invests directly or indirectly in one or more fixed income
investments.
Houghton Stock Fund - a fund that invests in Houghton Mifflin Company
common stock.
Equity Fund (available as of July 1, 1992) - a fund that invests directly
or indirectly in equity investments.
Eligible employees can elect to contribute in total 1% to 15% of their
compensation, excluding compensation in excess of $235,840 for 1993, $228,860
for 1992, and $222,220 in 1991, subject to an annual deferral limit for plans
operating under Section 401(k) of the Internal Revenue Code ($8,994 in 1993) to
any of the funds. Employee contributions are made through payroll deductions.
Included in 1993's contribution are rollovers amounting to $362,024. At
December 31, 1993, 201 employees were participating in all funds (197 in 1992),
1,167 were participating in one or a combination of two of the three funds
(1,191 in 1992) and 274 were participating solely in the Houghton Stock Fund
(334 in 1992).
The Company may elect to match an employee's contribution equal to 1%, 2%, or 3%
of the employee's compensation. Except for union employees, the Company's
contribution is currently 3% of the employee's compensation, as compared to 2%
of the employee's compensation prior to July 1, 1991. Union employees will not
be eligible for a Company matching contribution until March 1994, at which time
a match of up to 1% will begin. The matching contribution excluded compensation
in excess of $235,840 in 1993, $228,860 in 1992, and $222,220 in 1991. Subject
to the above limitations, the Company will match participant contributions to
the Houghton Stock Fund on a 100% basis, and to the Fixed Income Fund and to the
Equity Fund on a 50% basis. Company contributions are invested solely in the
Houghton Stock Fund. A member's interest in the Company's contributions is
fully vested at all times.
10
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
1. Plan Description (continued)
The Plan's Trust Agreement conforms to guidelines for salary reduction plans
under Section 401(k) of the Internal Revenue Code. Federal, and in most states,
state and local income taxes on these contributions are deferred until the
monies are withdrawn from the Plan.
Upon retirement or termination, distribution may be made as: (1) a lump-sum
payment of shares of stock and/or cash, (2) extended cash payments over a period
not to exceed 20 years, (3) a combination of both, or (4) periodic payment of
any amount until age 70 1/2, at which time another option must be elected.
Retiring or terminating members under the age of 65 who have over $3,500 in the
Plan may keep their monies in the Plan for withdrawal at a later date. Members
may make early withdrawals under certain limited conditions as set forth in the
Plan.
While the Company currently intends to continue the Plan, it necessarily
reserves the right to amend or discontinue the Plan. In the event of
discontinuance of the Plan by the Company, all interests will be distributed to
the participants or continue to be administered by the Plan committee and later
distributed.
2. Summary of Significant Accounting Policies
Investments
Houghton Mifflin Company's (the Company) common stock is valued at the average
of the high and low market prices on the last day of the year. Investments in
group annuity contracts with insurance companies are valued at cost plus
accumulated interest, which approximates current market value. The State Street
Bank and Trust Short-Term Income Fund is valued at its redemption price. Mutual
funds are valued at the Trust's stated market price per unit.
Dividend income is recognized on the ex-dividend date and interest income is
recorded as earned. All dividend and interest income is reinvested in the
respective funds.
Net investment income is allocated to participants based upon the ratio each
participant's share bears to the respective fund.
The Plan employs the share accounting method to account for participants' share
activity in the Houghton Stock Fund which results in no realized gains or losses
on withdrawals and distributions.
11
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
Income Tax Status
Determination letters from the U.S. Treasury Department indicate that the
Houghton Mifflin Company Employees' Savings and Thrift Plan (the Plan) is
qualified under section 401(a) of the Internal Revenue Code and is therefore
exempt from federal income taxes under provisions of Section 501(a) of the Code.
Participant withdrawals and distributions are subject to federal income tax to
the extent such withdrawals exceed the members' contributions to the Plan made
during the years 1981, 1982, and 1983. Participant and Company contributions to
the Plan made after January 1, 1984, are subject to federal income tax at the
time of withdrawal or distribution. The timing of the recognition of taxable
income by the participants is governed by applicable provisions of the Internal
Revenue Code.
Other
All administrative expenses of the Plan are borne by the Company.
Reclassification
Certain 1992 amounts have been reclassified to conform to the 1993 presentation.
3. Investments
Investments held by the Plan at December 31, 1993 and 1992 are summarized as
follows:
1993 1992
Market Market
Cost Value Cost Value
--------------------- ----------------------
Fixed Income Fund:
New York Life
Insurance,group
annuity contract,
8.63%, maturity date
7/1/93 $ 6,363,209 $ 6,363,209
Sun Life Insurance,
group annuity
contract,8.7%,
maturity date
7/1/94 $7,166,453 $7,166,453 6,580,765 6,580,765
12
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
3. Investment (continued)
1993 1992
Market Market
Cost Value Cost Value
--------------------- ----------------------
Metropolitan Life
Insurance, group
annuity contract,
8.95%,maturity
date 7/1/96 $ 5,273,353 $ 5,273,353 $ 4,840,159 $ 4,840,159
Sun Life Insurance,
group annuity
contract, 4.83%,
maturity date 7/1/95 3,059,908 3,059,908
---------- ---------- ---------- ----------
Total group annuity
contracts 15,499,714 15,499,714 17,784,133 17,784,133
----------- ---------- ---------- ----------
Federated Short-
Intermediate
Government Trust,
Mutual Fund
(319,109 units
in 1993 and
412,924 units
in 1992) 3,327,831 3,357,031 4,291,219 4,310,928
T.Rowe Price Stable
Value Fund
(5,349,138 units
in 1993) 5,349,138 5,349,138
----------- ----------- ----------- ----------
$24,176,683 $24,205,883 $22,075,352 $22,095,061
----------- ----------- ----------- -----------
13
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
3. Investment (continued)
1993 1992
Market Market
Cost Value Cost Value
--------------------- ----------------------
Houghton Stock Fund:
Houghton Mifflin
Company common stock
(657,084 shares in
1993 and 775,333
shares in 1992) $14,221,237 $31,991,777 $15,656,141 $30,528,737
State Street Bank
and Trust, Short-
Term Income Fund
(10 shares in 1993
and 52,000 shares
in 1992) 10 10 52,000 52,000
----------- ------------ ----------- -----------
14,221,247 31,991,787 15,708,141 30,580,737
----------- ------------ ----------- -----------
Equity Fund:
Investment Company
of America Mutual
Fund (484,355 units
in 1993 and 177,979
units in 1992)
8,864,719 9,085,846 3,171,051 3,184,049
----------- ---------- ----------- ----------
$47,262,649 $65,283,516 $40,954,544 $55,859,847
=========== =========== =========== ===========
14
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
3. Investments (continued)
Unrealized appreciation on investments of the Houghton Stock Fund
was as follows:
Unrealized
Appreciation
-------------
December 31, 1990 $ 4,562,660
December 31, 1991 7,060,302
------------
$ 2,497,642
============
December 31, 1991 $ 7,060,302
December 31, 1992 14,872,596
------------
$ 7,812,294
============
December 31, 1992 $ 14,872,596
December 31, 1993 17,770,540
------------
$ 2,897,944
============
Unrealized appreciation on investments in the Fixed Income Fund was as follows:
Unrealized
Appreciation
-------------
December 31, 1991 $ 0
December 31, 1992 19,709
-------------
$ 19,709
=============
December 31, 1992 $ 19,709
December 31, 1993 29,200
-------------
$ 9,491
=============
15
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Notes to Financial Statements
3. Investments (continued)
Unrealized appreciation on investments in the Equity Fund was as follows:
Unrealized
Appreciation
------------
December 31, 1991 $ 0
December 31, 1992 12,998
------------
$ 12,998
============
December 31, 1992 $ 12,998
December 31, 1993 221,127
------------
$ 208,129
============
Under the Trust Agreement with State Street Bank and Trust Company (the
Trustee), the Company remits contributions directly to the Trustee, who has
discretionary authority, subject to certain limitations as specified in the
agreement, for the purchase and sale of investments. The Trustee holds
temporary cash reserves in its Short-Term Income Fund.
In 1990, the Trustee purchased four group annuity contracts, also known as
guaranteed income contracts (GIC), issued by four insurance companies. A
contract which matured in January 1992 was replaced with a mutual fund, the
Federated Short- Intermediate Government Trust. A contract which matured in
July 1993 was replaced with an additional group annuity contract and a
diversified guaranteed income contract pool.
For fiscal years beginning in 1990, ERISA reporting requires the disclosure of
unrealized appreciation for certain investments on Form 5500, "Annual
Return/Report of Employee Benefit Plans", to be calculated using the fair market
value of the securities at the beginning of the year or the purchase price of
the securities if purchased during the year, rather than the historical cost
basis required by generally accepted accounting principles. The unrealized
appreciation for the Houghton Stock Fund was $5,910,395 and $8,161,261 for the
years ended December 31, 1993 and 1992, respectively.
16
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Supplemental Schedule
Reportable Transactions (a)
Year Ended December 31, 1993
Number of
Shares/Units Selling or
Type of Description or Face Purchase Exchange Realized
Transaction of Issue Rate Amount Price Price Gain
- ----------- ----------- ---- ----------- -------- --------- --------
Individual
transactions
in excess of
5%:
- -----------
Purchase T.Rowe Price
Trust Co.,
Stable Value
Fund - 4,000,000 $4,000,000
Purchase Sun Life
Insurance 4.73% 3,000,000 3,000,000
Maturity New York Life
Insurance 8.63% 6,678,001 6,678,001 $6,678,001
Series of
transactions
in excess of
5%:
- -----------
COMMON STOCK:
Purchases Houghton
Mifflin
Company 50,323 2,089,367
Distri-
butions Houghton
Mifflin
Company 168,685 3,526,980 6,922,872 $3,395,892
MUTUAL FUND:
Purchase Federated
Short-
Intermediate
Government
Trust 164,725 1,731,355
Sale Federated
Short-
Intermediate
Government
Trust 258,540 2,694,742 2,720,680 25,938
(a) Reportable transactions are defined as any single transaction or series of
transactions involving an amount in excess of 5% of the fair value of the Plan's
assets as of the beginning of the year.
17
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Supplemental Schedule
Reportable Transactions (a) Continued
Year Ended December 31, 1993
Number of
Shares/Units Selling or
Type of Description or Face Purchase Exchange Realized
Transaction of Issue Rate Amount Price Price Gain
- ----------- ----------- ---- ----------- -------- --------- --------
Purchase T.Rowe Price
Trust Co.,
Stable Value
Fund $5,349,138 $5,349,138
Purchase Investment
Company of
America 340,773 6,298,238
Sale Investment
Company of
America 33,383 628,268 $604,318 $23,950
GROUP
ANNUITY
CONTRACTS:
Purchase Sun Life
Insurance 4.73% 3,059,908 3,059,908
Maturity New York
Life
Insurance 8.63% 6,678,001 6,678,001 6,678,001
SHORT-TERM
INCOME FUND:
Purchases State Street
Bank and
Trust Co. Variable 5,619,744 5,619,744
Sales State Street
Bank and
Trust Co. Variable 5,671,734 5,671,734 5,671,734
(a) Reportable transactions are defined as any single transaction or series
of transactions involving an amount in excess of 5% of the fair value of
the Plan's assets as of the beginning of the year.
18
<PAGE>
Houghton Mifflin Company Employees'
Savings and Thrift Plan
Supplemental Schedule
Schedule of Party-in-Interest Transactions
December 31, 1993
There were no party-in-interest transactions which were prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
19
